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Revisiting Rentierism through the Lens of Algerian Gas

Authors: Aurelia Mane-Estrada and Roger Albinyana 

Affiliation: Department of History and Economic Institutions at University of Barcelona and  European Institute of the Mediterranean 

Organization/ Publisher:  Revue International des Études du Développement

Date/Place: 2023/ France

Type of Literature: Journal Article 

Number of Pages: 19


Keywords: Rentierism, Algeria, Natural Gas


This article discusses Algeria’s future as a natural gas rentier state, focusing on the Theory of the Rentier State (TES) and the existence of “mining rents” in a natural gas exporter’s economy. It explores the systemic conditions for natural gas to generate rent, revealing that Algerian gas exports generate rent. The article also evaluates the integration of Algerian natural gas into global and regional value chains and describes the relationship as one of dependence.

  • On the Concepts of Rentierism and Rentier State:

Rentierism is an economic concept that refers to groups or individuals receiving a significant share of produce without actively participating in production tasks. It is defined by “rentier behavior,” or lack of productive behavior, which is often related to state, group, or individual rentier behaviors. However, rentierism lacks context and does give attention to the reconfiguration of the GIOI between the 1970s and 1980 or the needs of the world economy, particularly the American economy. This lack of context leads to the idea that rentierism is the result of individual choice by OPEC members, which is arguably an “Orientalist” conception. Rentierism is seen as the result of decisions adopted by groups with rentier behaviors or mentalities, regardless of the objective conditions for rent generation. This individualistic view is reinforced by the use of concepts like autonomous state and distributive state, which reinforce the idea that rent-seeking behavior is primarily due to state’s individual choices. 

A rentier economy is an economic category that requires a context and territorial relationship to secure oil rent. It is not the result of individual actions or decisions, but rather the needs of the world economic system. Rentier state theory (RST) has evolved from a descriptive category to an explanatory one, addressing economic phenomena such as the “resource curse” and political phenomena like lack of democracy. However, some authors argue that rentierism is a synonym for RST, and others argue that it is a result of the function of certain states and their rent in the Governance of International Oil Industry (GIOI) within the world economy. Rentier state theory is not a result of individual or group mentality, but rather the needs of the world economic system. Therefore, according to the authors, the category of rentier state should be defined based on the function that certain states and their rent perform within the GIOI and the world economy.

  • Rent and Rentierism from the Point of View of  Political  Economy:

Rentierism is a result of a world reconfiguration of energy relations, driven by inequality and scarcity, and the 1970s oil shocks, which established a unified oil market and created rentierism.

Rent as an Economic Category that is the Result of Inequality, Scarcity, and a Unified Market: Oil rent, or hydrocarbon rent, is a type of rent of mines, attributed to David Ricardo (1977). It consists of four key components: land ownership, inequality in productivity, scarcity of product, and a unified market or single price. As oil becomes scarce, less productive fields, such as those with less product, greater extraction difficulties, and land-intensive fields, must be exploited. A unified market would ensure that Iraqi oil is paid at the same price as North Sea oil, while the owner of Iraqi oil would receive the same profit and rent of mines as its Canadian counterpart.

For oil rent to exist, there must be an ownership regime on hydrocarbon-rich fields, participation in the same market from different quality fields, and scarcity that obliges the poorest quality fields to be exploited. Mechanisms for the accruing or distribution of rent are established, involving ownership and control regimes, market conditions, ensuring the balance between good and poor-quality fields, fixing a single oil price, and establishing distribution criteria. The GIOI, the institutional architecture of the oil market, influences these tasks. The energy power game, involving governments of rich-hydrocarbon economies, transnational oil conglomerates, and countries of final use of oil derivatives, is essential for oil rent generation. Rent in the international oil game is influenced by the relationship between fields and stakeholders, as outlined in the Global Oil Industry (GIOI). This relationship invalidates rentierism as a result of a single group’s behavior, as rentierism is the result of such a relationship.

The Emergence of Rentierism in the 1970s: The US administration created the International Energy Agency (IEA) in 1973, which grouped companies and governments of consuming countries. This reconfiguration led to cartelization and a recurrent fiction of scarcity of supply to offset abundance. This legitimized the existence of oil rent and the survival of main IOCs, while ensuring an appropriate rent generation that provided sufficient national rent and adequate profits to producing countries. OPEC and IEA ensured that the oil price, as the energy base of the system, suited the hegemonic economy(ies). In contemporary capitalism, this can be understood in two ways: clarifying the function of the oil price in this system and examining the role of cartelization and scarcity in the oil market.

The creation of the oil great pool in the 1970s enabled rentierism in the MENA region. This oil pool was linked to alliances and agreements on oil rent sharing, as seen in Algeria’s oil taxation regimes. OPEC’s role prevents unilateral and bilateral decisions, meaning that small and medium oil economies like Algeria’s oil policy are influenced by OPEC decisions, and not the rentier mentality of their leaders. The systemic function of oil prices invalidates individual behaviors and methodological individualism in the analysis of rentier states.

  • Would Algeria Become a Gas Rentier State?

Integrating gas into the international market, as crude oil is within Global Value Chains (GVCs), could promote economic development, attract investments, and strengthen the hydrocarbon industry’s sustainability and business model. This could lead to a higher degree of power in the relationship between countries. The likelihood of an Algerian gas rentier state depends on whether a unified international gas market and governance framework generates international income and capture by countries like Algeria.

Hydrocarbon rents to Algeria are not a result of progressive integration into GVCs and GPNs but rather result from commodity traditional trade linkages, mainly in raw hydrocarbons. This indicates Algeria’s low contribution to exports and low share of input-produced hydrocarbon exports. Algeria’s higher dependency on trade partners triggers an increasingly asymmetric power relationship with its partner countries.

  • New Trends in the International Gas Trade:

The current situation resembles the past, as an international gas regime similar to the 1970s for oil may differ in economic conditions and capitalist needs. Algeria, the first country to have a liquefied natural gas facility in 1964, may remain on the losing side. Despite becoming a rentier state in the late 1970s, Algeria’s commitment to a modern gas industry was reflected in its First Four-Year Plan (1970-1973) and the Charte Nationale of 1976.

In the case of Algeria, as for other hydrocarbon exporters, rent is accruing domestically like national income as a result of taxation. The Algerian state-owned oil company, Sonatrach, converts foreign income from oil exports into Algerian rent through hydrocarbon legislation. These laws regulate the relationship between Sonatrach and its foreign partners and determine the hydrocarbon tax system and arbitration in disputes. A correlating trend between oil product export value and rents accruing to the state is evident, possibly due to legislative reforms that began in 2001 and capped in 2005 and 2006. The relative oil tax (ROT) has dropped significantly since then, with new reforms likely to further reduce taxation. However, the figure does not suggest a correlation between hydrocarbon export volume and rent flow into Algeria, as rent tends to become lower than export income.


Conclusion: In the 1970s, the rise in oil prices and the US’s incorporation into the international market led to the creation of a unified market and a dual power game between producing countries (OPEC) and consuming countries (international oil companies, OECD countries). This dual regime helped set international prices and generate rent, contributing to global imbalances. Rentierism is a systemic phenomenon, and therefore is not based on the individual mentality and behavior of rentier states. The dual governance structure in Algeria and other OPEC countries, such as Iraq and Libya, imposed a system where national oil policies were shaped by export quotas, rather than domestic economic needs. The case study highlights three questions: 1) the different behavior in rent generation between oil and gas exports, 2) the relationship between hydrocarbon exports and rent generation which is not necessarily proportionally invariant, and 3) doubts about the future of rentierism in Algeria due to the growing importance of gas in production and export, and its low integration into value chains. The trend towards the petrolization of the gas market, the growing importance of liquefied natural gas, and conflicts with neighboring countries suggest a potential for an international LNG market, which would generate gas rent. The role of Algerian gas in a hypothetical scenario remains unclear, with two possibilities: integration into European value chains or tapping into a great gas pool. The path between these options will determine if Algeria’s economy will become a rentier economy in the future.

By: Dr. Nabil Kahlouche, Strategic Researcher



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